TUNG HING TECHNOLOGY INVESTMENT LTD. AND OTHERS v. THE COMMISSIONER OF CUSTOMS AND EXCISE

1998 HCAL No. 95

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

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J U D G M E N T

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Introduction

1. Copyright piracy is a growing and serious problem in Hong Kong. The Customs and Excise Department estimate that there are over 800 shops in Hong Kong selling counterfeit compact discs, and that the number of factories producing counterfeit compact discs has soared from less than 10 in 1996 to over 40 in 1997, and exceeded 50 before the Prevention of Copyright Piracy Ordinance (Cap. 544) came into operation earlier this year. It is a matter of common knowledge that counterfeit compact discs are widely available from hawkers. Understandably, copyright owners are concerned that the market for their compact discs is being damaged. This application for judicial review relates to the powers given to the Customs and Excise Department to combat the war against the production and sale of counterfeit compact discs. Unless otherwise stated, all dates in this judgment refer to dates in 1998, and the references in this judgment to sections of an Ordinance are to sections of the Copyright Ordinance (Cap. 528).

The facts

2. The 3rd Applicant, Golden Science Technology Ltd. ("the Company"), produces compact discs. It does so from four sets of premises in Fanling. It has 41 compact disc production machines and 12 printing machines. The majority of the production machines are leased from the 1st and 2nd Applicants. On 26th April, these premises were raided by ICAC officers who were investigating allegations of corruption. They found about 20.9m. video compact discs ("VCDs") at the premises. They found a further 1.6m.VCDs in two containers in Cha Kwo Ling. All the printing machines and 38 of the 41 production machines were in operation, many of which were producing and printing VCDs with Western film titles. The officers were accompanied by Ho Wai Hung, a director of a company which represented the Motion Picture Association. He expressed the view that many of the VCDs in production were infringing copies.

3. The Copyright Ordinance permits the seizure and detention of anything which appears to be evidence of an offence under Part II of the Ordinance. However, these powers of seizure and detention are not conferred on officers of the ICAC, but on officers of the Customs and Excise Department. Accordingly, the Customs and Excise Department was notified what the raid had revealed, and on the following day Senior Inspector Kenneth Wong of the Customs and Excise Department visited the premises himself. No production was taking place at the time, but many of the production machines still had their power switched on. He had been informed of the view expressed by Mr. Ho, but there were three additional factors which caused him to suspect that the VCDs being produced by the machines were infringing copies:

(i) The source identification codes of the International Federation of the Phonographic Industry were not marked on the inner ring of the VCDs.

(ii) Many of the VCDs were printed in a single colour of poor quality.

(iii) One of the film titles on the machines was "Titanic", which was still being shown in cinemas.

4. In the light of these suspicions, officers from the Customs and Excise Department raided the premises on 29th April. Pursuant to his powers under the Ordinance, S. I. Wong authorised the seizure of the VCDs, machines and other items which appeared to him to be likely to be evidence of offences under Part II of the Ordinance. In due course, the VCDs were removed from the premises and the containers in Cha Kwo Ling, and kept by the Customs and Excise Department. As for the production and printing machines, they were not removed from the premises. They were not even dismantled. The reason for that was that the production machines are extremely delicate pieces of equipment. I know from other cases that the risk of serious damage to such machines, if they are dismantled and removed by contractors unfamiliar with them, is considerable. Instead, they were detained in situ, and the Company has been denied permission to use them.

The statutory framework

5. Section 118 creates a variety of criminal offences relating to the production, possession, sale and hire of infringing copies of copyright works without the licence of the copyright owners. Section 122 gives certain powers of search and seizure to officers of the Customs and Excise Department who are investigating the commission of such offences. Thus, section 122(1) empowers such an officer to

"(b) seize, remove and detain ... (ii) anything which appears to him to be ..., or to be likely to be ..., evidence of an offence under this Part."

Both sections 118 and 122 are in Part II of the Ordinance. That was the power under which S. I. Wong authorised the seizure of the VCDs and the production and printing machines on 29th April, and under which they have subsequently been detained.

6. The Ordinance provides that any article seized or detained under section 122 is liable to forfeiture (section 131(1)). However, the owner of the article can, by notice to the Commissioner of Customs and Excise ("the Commissioner"), claim that the article is not liable to forfeiture (section 131(5)). The Company's solicitors gave such a notice to the Commissioner on 17th June, and asked for the return of the VCDs and the release of the production and printing machines which had been seized and were still being detained. The Commissioner refused to return or release them. However, the Company's notice under section 131(5) meant that the Commissioner then had a reasonable time to consider the matter. After that, he had either to return the VCDs and release the production and printing machines to the Company, or to apply to the court for their forfeiture (section 133(1)).

Subsequent events

7. Three things have occurred since the Company's notice under section 131(5) was served. First, one of the production machines was released to the Company as the Customs and Excise Department was satisfied that it had not been used to produce infringing copies. Secondly, about 2,000 VCDs entitled "The Force of the Future", which the Company had produced for the Hong Kong Police Force, were returned to the Company. The Customs and Excise Department was satisfied that they were not infringing copies. Thirdly, on 27th October, the Company and some of its directors and employees were charged with conspiracy to defraud and various copyright and trade descriptions offences.

8. However, the things which have not occurred since the Company's notice under section 131(5) was served should also be noted. The Commissioner has not released any of the 40 remaining production machines or any of the printing machines to the Company. Nor has he returned to the Company the rest of the VCDs. Nor has he yet applied to the court for their forfeiture. What he intends to do is to make a forfeiture application at the conclusion of the criminal proceedings.

The decisions challenged

9. The decisions of the Commissioner which are challenged in this application for judicial review are:

(i) his refusal to return to the Company some of the 22.5m. odd VCDs which were seized on 29th April and which he is still detaining,

(ii) his refusal to permit the Company to use some of the 40 production machines and the 12 printing machines which were seized on 29th April and which he is still detaining - though since they have been detained in situ, his refusal to permit the Company to use them amounts to a refusal to release them from detention,

(iii) his failure to apply to the court for the forfeiture of the VCDs, the production machines and the printing machines, even though he has had a reasonable time to consider the matter.

Material evidence

10. The Company's case is that the continued detention of at least some of the VCDs and the production and printing machines is unlawful because that detention is no longer justified under section 122(1)(b)(ii). Whatever may have been the position in the past, they cannot now be said to appear to S. I. Wong to be likely to be evidence of an offence under Part II of the Ordinance. For his part, the Commissioner contends that that issue is not even engaged, because his first justification for refusing to return the VCDs to the Company or to release the production and printing machines to the Company is that they represent material evidence in the criminal proceedings.

11. There is, I think, no doubt that once articles have been produced in court and have become exhibits, they may be retained until an order has been made for their disposal at the conclusion of the proceedings. As Wright J. said in R. v. Lushington ex p. Otto [1894] 1 QB 420 at pp.423-424:

"I think it is ... undoubted law that when articles have once been produced in Court by witnesses it is right and necessary for the Court, or the constable in whose charge they are placed (as is generally the case), to preserve and retain them, so that they may be always available for the purposes of justice until the trial is concluded."

The existence of that power was recognised in R. v. Lambeth Metropolitan Stipendiary Magistrate ex p. McComb [1983] 1 QB 551. Indeed, it was held that the prosecuting authorities had not merely the power to retain the exhibits in these circumstances, but also a duty to do so - though the court went on to hold that that duty was not broken in the particular circumstances of that case when the exhibits were released for use in a foreign court.

12. These considerations do not apply to the present case, because the VCDs and the production and printing machines have not yet been produced in court or been made exhibits. Does the Commissioner have a power to retain the VCDs and the production and printing machines in these circumstances, irrespective of whether their detention would otherwise be unlawful, simply because they represent material evidence in criminal proceedings? Another passage in the judgment in Lushington provides the answer. At p.423, Wright J. said:

"In this country, I take it that it is undoubted law that it is within the power of, and is the duty of, constables to retain for use in Court things which may be evidence of crime, and which have come into the possession of the constables without wrong on their part." (Emphasis added)

Thus, if the continued detention of the VCDs and the production and printing machines would not be lawful because that detention could not be justified under section 122(1)(b)(ii), it follows that their detention cannot be justified under common law powers relating to the preservation of material evidence.

13. The correctness of the proposition in Lushington was not addressed in Malone v. Metropolitan Police Commissioner [1980] 1 QB 49, a case much relied on by Mr. Adrian Huggins S.C. for the Commissioner. That is because it was not disputed (see p.56F) that the articles in question had been lawfully seized. Accordingly, the real issue in that case was whether, on the particular facts of the case, circumstances might arise under which the articles detained could represent material evidence at the trial.

14. Accordingly, I reject the Commissioner's first contention. Even if the VCDs and the production and printing machines could be said to represent material evidence in the criminal proceedings, the Commissioner must return them to the Company if their current detention is unlawful, i.e. if they cannot be said to appear to S. I. Wong to be likely to be evidence of an offence under Part II of the Ordinance. In reaching that conclusion, I have not overlooked the rule that even if evidence is unlawfully obtained, it might still be admissible as evidence. But the fact that evidence is admissible if an application for its return is not made does not mean that an application for its return cannot be made on the ground that it is being unlawfully detained.

The relevant date

15. It is important to identify the relevant date for the purposes of the current inquiry. The question is not whether the VCDs and the production machines appeared to S. I. Wong at the time of their seizure to be evidence of an offence, because no relief is sought for their unlawful seizure: relief is sought only for their unlawful detention. If the Company is to be granted any relief for their unlawful detention, the court must be satisfied of two things:

(i) The articles seized must not have appeared to S. I. Wong on 16th October (when the Originating Motion was filed) to be liked to be evidence of an offence. After all, if the articles had appeared to him then to be likely to be evidence of an offence, and if it was only subsequently that that ceased to appear to him to be the case, these proceedings would have been issued prematurely. And if the articles had appeared to him then to be likely to be evidence, these proceedings would have been issued too late if it had only been prior to 16th October that that had not appeared to him to be the case.

(ii) The articles must not appear to S. I. Wong now to be likely to be evidence of an offence. If they appear to him now to be likely to be evidence of an offence, the detention now will be lawful, whatever may have been the position in the past, and no question of any relief relating to their return or release would arise.

The refusal to return the VCDs

16. Before I turn to the evidence, there are three preliminary points which I must mention. First, Mr. Philip Dykes S.C. for the Applicants argued that the VCDs could only appear to S. I. Wong to be likely to be evidence of an offence if they appear to S. I. Wong to be likely be infringing copies. I do not agree. I can think of circumstances in which non-infringing copies could be likely to be evidence of an offence. For example, section 118(3) provides a statutory defence to a person charged with an offence under section 118(1) - namely, if he proves that he did not know, and had no reason to believe, that the copy in question was an infringing copy. If the defendant had both infringing and non-infringing copies in his possession, and if the infringing copies looked different from the non-infringing copies, it may be much more difficult for the defendant to establish the statutory defence. Accordingly, although infringing copies would undoubtedly be evidence in a prosecution under section 118(1) relating to those infringing copies, non-infringing copies may well be evidence in a prosecution under section 118(1) of infringing copies in order to rebut the statutory defence. There may, for all I know, be other examples of circumstances in which non-infringing copies could be likely to be evidence of an offence.

17. Secondly, Mr. Huggins argued that this application is not the correct forum for determining whether any of the VCDs are infringing copies. He contended that for that reason there could be no question of the court ordering the return of any of the VCDs to the Company. I agree with his first proposition but not the second. Mr. Huggins was correct when he said that the question whether any of the VCDs were infringing copies was to be decided in the criminal proceedings or the forfeiture proceedings. But the legality of their detention does not depend on whether they are in fact infringing copies, or even on whether they appear to S. I. Wong to be infringing copies, but on whether they appear to S. I. Wong to be likely to be evidence of an offence under Part II. The focus in the present proceedings is on S. I. Wong's state of mind, and even then the focus is not on whether the VCDs appear to him to be likely to be infringing copies, but on whether they appear to him to be likely to be evidence of an offence. Accordingly, there is no reason why I should not order their return to the Company if on 16th October the VCDs did not appear to S. I. Wong to be likely to be evidence of an offence, and they do not appear to him to be so today.

18. Thirdly, the phrase "appears to him to be ... likely to be ... evidence of an offence" is not entirely straightforward. I have concluded, though, that the VCDs will appear to S. I. Wong to be likely to be evidence of an offence if he believes that they are likely to be relied on as evidence in proceedings for an offence under Part II of the Ordinance to prove that such an offence has been committed. Mr. Dykes submitted that there has to be some basis for that belief: it could not be right for the detention of articles to be lawful even if the detaining officer's belief that they were likely to be relied on as evidence is without foundation. Mr. Huggins did not feel able to dispute this proposition. For my part, I agree with counsel, though the threshold which has to be overcome is much lower than that the belief has to be reasonable. That is apparent from the structure of section 122(1). Section 122(1)(a) expressly requires the suspicion to be reasonable before premises may be entered or vessels and aircraft may be boarded or vehicles may be stopped for the purposes of searching them. The requirement of reasonableness in section 122(1)(b) is conspicuous by its absence.

19. In the light of these principles, I turn to the evidence relating to the 22.5m. VCDs which are still being detained. That evidence has to be viewed in the light of the fact that S. I. Wong has ample grounds for believing that infringing copies of VCDs were being produced on the premises. Many of the VCDs actually in production and many of the other VCDs found on the premises bore Western titles for which licences had not been obtained from their copyright owners. And the evidence is that more than 40 of the people who worked at the Company's various premises had stated to the investigating officers that they were aware or suspected that the premises were being used to produce counterfeit VCDs as well as non-infringing ones. Since S. I. Wong has ample grounds for believing that infringing copies of VCDs were being produced on the premises, S. I. Wong has ample grounds for believing that at least some of the VCDs are infringing copies - even if there were on the premises non-infringing VCDs as well. The issue is whether those of the VCDs for which there is no foundation for his belief that they are likely to be infringing copies are nevertheless VCDs for which there is some foundation for his belief that they are likely to be relied on as evidence in proceedings for an offence under Part II of the Ordinance to prove that such an offence has been committed.

20. To resolve that issue, it is necessary first to identify for which of the VCDs there is some foundation for S. I. Wong's belief that they are likely to be infringing copies. The 22.5m. VCDs fall into four categories, and I must deal with each in turn.

(i) Mei Ah (HK) Co. Ltd. ("Mei Ah"). Approximately 11m. VCDs bear titles of films which Mei Ah had authorised the Company to produce. However, purchase orders produced to the investigating officers suggest that the Company may only have been authorised to produce 9.04m. VCDs bearing those titles.¹ In any event, the evidence is that inquiries have revealed "a discrepancy in the number of titles and discs which [the Company] was authorised to produce", and the current state of the investigation suggests that the Company may only have been authorised to produce 5.8m. VCDs bearing these titles.

21. The effect of all this is that the evidence of unauthorised production of some VCDs bearing these titles is strong. If unauthorised production has taken place of VCDs bearing these titles, it could be that all 11m. VCDs bearing these titles were unauthorised, the authorised VCDs (whether 9.04m. or 5.8m.) having already been disposed of. However, the question is not whether it appears to S. I. Wong that the VCDs could be infringing copies, but whether it appears to him that they are likely to be. I conclude, therefore, that although there is some foundation for S. I. Wong's belief that 5.2m. VCDs bearing titles authorised by Mei Ah are likely to be infringing copies, there is no foundation for his belief that the remaining 5.8m. VCDs are likely to be (rather than could be) infringing copies.

(ii) China Star HK Entertainment Co. Ltd. ("China Star"). Approximately 6.2m. VCDs bear titles of films which China Star had authorised the Company to produce. However, letters produced to the investigation officers suggest that the Company may only have been authorised to produce 4.2m. VCDs bearing those titles.² Moreover, the evidence is that it is believed that in fact only 2.8m. VCDs bearing those titles were authorised by China Star, though there is no evidence as to where this figure comes from.

22. The effect of all this is that the evidence of unauthorised production of some VCDs bearing these titles is strong. If unauthorised production has taken place of VCDs bearing these titles, it could be that all 6.2m. VCDs bearing these titles were unauthorised, the authorised VCDs (whether 4.2m. or 2.8m.) having already been disposed of. As with the Mei Ah VCDs, I therefore conclude that, although there is some foundation for S. I. Wong's belief that 3.4m. VCDs bearing titles authorised by China Star are likely to be infringing copies, there is no foundation for his belief that the remaining 2.8m. VCDs are likely to be (rather than could be) infringing copies.

(iii) The unmarked VCDs. Approximately 3.9m. VCDs are unmarked. It is not possible to tell by inspecting them what films are on them. The only way to tell what films are on them is to play them. That had not been done by the date of the hearing before me. To do so would, I imagine, be a mammoth exercise. But since non-infringing VCDs were being produced on the premises, these unmarked VCDs could well be non-infringing copies. Although they could be infringing copies, it is not possible to say that there is some foundation for S. I. Wong's belief that they are likely to be infringing copies.

(iv) The remaining VCDs. There are approximately 1.4m. remaining VCDs. They have all been checked, and have been itemised in a schedule prepared by the ICAC.³ That schedule identifies each title and how many VCDs bearing that title were found. The copyright owners of some of the titles have still to be identified, and there is no evidence before me that in the case of those titles whose copyright owners are known, the copyright owners have confirmed that the Company was not authorised to produce films bearing these titles. However, many of the films bear Western titles, and the Company has not produced any documents from the copyright owners of any of the titles, Western or otherwise, authorising the Company to produce films bearing these titles. In these circumstances, I am satisfied that there is some foundation for S. I. Wong's belief that all these VCDs are likely to be infringing copies.

23. Accordingly, of the 22.5m. VCDs detained, there is no foundation for S. I. Wong's belief that 12.5m. of them (5.8m. Mei Ah VCDs, 2.8m. China Star VCDs and 3.9m. unmarked VCDs) are likely to be infringing copies. But does S. I. Wong nevertheless believe that these VCDs are likely to be relied on as evidence in proceedings for an offence under Part II of the Ordinance to prove that such an offence has been committed? And is there some foundation for that belief? Those are not matters which the evidence or counsel's submissions have addressed. I know that S. I. Wong regards the VCDs "as evidence of offences under s.118". But I do not know whether he meant by that that he thought that the VCDs were likely to be infringing copies, or whether he meant that he thought that they were likely to be relied on as evidence in proceedings for an offence under Part II to prove that the offence had been committed. For all I know, he might have meant something else. And even if he meant that he thought that they were likely to be relied on as evidence in proceedings for an offence, it has not been explained to me why he should think that about non-infringing VCDs. I shall refer to what I should do in the circumstances when I have considered whether the production and printing machines should be released to the Company.

The refusal to release the production and printing machines

24. Two of the 40 production machines still being detained were not being used on 26th April when the premises were raided by the ICAC officers. 32 of the 38 production machines and 10 of the 12 printing machines which were being used on 26th April were being used to produce Western titles which Mr. Ho identified as infringing copies. But there were 6 production machines and 2 printing machines which were being used on 26th April to produce films whose titles Mr. Ho has not identified. It follows that there is no evidence that at the time of the raid, the 8 production machines and the 2 printing machines were being used to produce and print infringing copies. Mr. Dykes contended that these production and printing machines should be returned to the Company. He accepted that they cannot be used by the Company until such time as it obtains a licence from the Commissioner under the Prevention of Copyright Piracy Ordinance to manufacture optical discs.

25. This argument assumes that whether the production and printing machines can be said to appear to S. I. Wong to be likely to be evidence of an offence depends on whether they can be said to appear to him to have been used for producing infringing copies. I do not think that it is as straightforward as that. As with the VCDs, the production and printing machines may be detained if S. I. Wong believes that they are likely to be relied on as evidence in proceedings for an offence under Part II of the Ordinance to prove that such an offence has been committed, and that there is some foundation for that belief.

26. Again, these are not issues which the evidence or counsel's submissions have addressed. I know that S. I. Wong regards the production and printing machines "as evidence of offences under s.118". But I do not know whether he meant by that that he thought that the machines were likely to have been used to produce infringing VCDs, or whether he meant that he thought that they were likely to be relied on as evidence in proceedings for an offence under Part II to prove that an offence had been committed. As with the VCDs, he might have meant something else entirely. And even if he meant that they were likely to be relied on as evidence in proceedings for an offence, it has not been explained to me why that should be the case.

What should be done?

27. I am very reluctant to embark on a consideration of these issues relating to the VCDs and the production and printing machines on material which may be incomplete and without the benefit of argument. The course which I propose to take, therefore, is as follows. I decline to order the Commissioner to return to the Company the 10m. VCDs (5.2m. Mei Ah VCDs, 3.4m. China Star VCDs and the 1.4m. remaining VCDs) for which I have found that there is some foundation for S. I. Wong's belief that there are likely to be infringing copies. I adjourn for further consideration the question whether I should order the Commissioner to return to the Company the 12.5m. VCDs for which I have found that there is no foundation for S. I. Wong's belief that they are likely to be infringing copies. I also adjourn for further consideration the question whether I should order the release to the Company of the production and printing machines. The hearing should take place as soon as possible, but not before 4th January 1999, and although I give leave to the Applicants and the Commissioner to file further evidence on the topic, that evidence has to be filed by 4.00 p.m. on 30th December 1998.

28. I should add three things. First, my inability to decide at present whether the 12.5m. VCDs and the production and printing machines should be returned to the Company does not mean that the issue relating to the Commissioner's failure to apply to the Court for forfeiture should not be decided now. Secondly, the issues as to whether S. I. Wong believes that the 12.5m. VCDs are likely to be relied on as evidence, and whether he has any foundation for that belief, will have become academic by the date of the next hearing if

(a) they have by then been produced in court and become exhibits in the criminal proceedings, or

(b) there is by then some foundation for S. I. Wong's belief that they are likely to be infringing copies.

Thirdly, the issues as to whether S. I. Wong believes that the production and printing machines are likely to be relied on as evidence, and whether he has any foundation for that belief, will have become academic by the date of the next hearing if

(a) they have by then been produced in court and become exhibits in the criminal proceedings, or

(b) the Company accepts that the fact that it is unlikely to be licenced to manufacture optical discs until after the conclusion of the criminal proceedings makes it a waste of time and expense to pursue the claim for the release of the machines now.

29. The Commissioner's failure to apply to the court for forfeiture

The Commissioner's duty to apply to the court for the forfeiture of the VCDs and the production and printing machines is in section 133(1), which provides as follows:

"Where a notice of claim is given under section 131, the Commissioner or an authorized officer shall apply to a magistrate, the District Court or the High Court for the forfeiture of the article ... unless the Commissioner is satisfied, within a reasonable period after the receipt of the notice of claim, that, on the basis of the evidence of the case, the article ... should be delivered to the claimant."

The VCDs and the production and printing machines were seized and detained on 29th April. I have not overlooked the magnitude of the Commissioner's task. However, in my view, a reasonable period of time had elapsed between then and 16th October (when the Originating Motion was filed) for the Commissioner to satisfy himself, on the basis of the evidence which he had, whether or not they should be returned to the Company. On the face of it, therefore, section 133(1) required him to have applied by then to the Court for their forfeiture.

30. Mr. Huggins contended that whatever may have been the position then, the fact that charges were laid against the Company on 27th October has changed all that. Now that criminal proceedings against the Company have been commenced, it is said to be open to the Commissioner to postpone making an application to the Court for forfeiture until after the conclusion of the criminal proceedings. He relied on sections 133(5) and 133(6), which provide that when the claimant is the defendant in criminal proceedings under section 118 in connection with the seized or detained articles, the court may hear the Commissioner's application for forfeiture "immediately following the criminal proceedings". The only difference between sections 133(5) and 133(6) relates to the circumstances in which the issue or service of a summons or notice of the hearing may be dispensed with.

31. I reject this argument. Sections 133(5) and 133(6) relate to when the application for forfeiture may be heard, not to when the application for forfeiture is to be made. Such an application has to be made when section 133(1) requires it to be made. Once the application has been made - i.e. once the appropriate originating process has been issued if the application is made in the High Court or the District Court - it is for the court to decide when the application is to be heard. Thus, if criminal proceedings relating to the seized or detained articles have been commenced against the claimant, it is open to the court to decide that the hearing should take place on a date to be fixed

(a) without reference to whether it takes place before the conclusion of the criminal proceedings,

(b) after the conclusion of the criminal proceedings, or

(c) immediately after the conclusion of the criminal proceedings (which is the power expressly given to the court by sections 133(5) and 133(6)).

It follows that by 16th October the Commissioner should have applied to the court for the forfeiture of the VCDs and the production and printing machines which were still being detained.

Conclusion

32. For these reasons, I make an order of mandamus requiring the Commissioner, by noon on 24th December, to apply to a magistrate, the District Court or the High Court for the forfeiture of those of the VCDs which have not been returned to the Company by then, and for the forfeiture of those production and printing machines which have not been returned to any of the Applicants by then. I make an order nisi reserving the costs of this application for judicial review until I have decided whether the VCDs and the production and printing machines should be returned to the Applicants. I give the parties liberty to apply in relation to the costs which I have reserved, in the event of the issue relating to the return of the VCDs and the production and printing machines not being referred back to the court.

Notes:

1 This figure differs from the 6.34m. contained in the schedule handed to me during the hearing, because the 270 titles authorised by the purchase order of 1st March 1998 amounted to 5.4m., not 2.7m., VCDs.

2 This figure differs from the 8.4m. contained in the schedule handed to me during the hearing, because the letters on pp.514, 524, 528 and 534 of the bundle duplicate the letters on pp.509, 519, 526 and 530 of the bundle.

3 This schedule is exhibit SPS6. It lists approximately 4.8m. VCDs, but 3.4m. of them bear titles of films which China Star authorised the Company to produce.